This is a review of the elements likely to affect foreign exchange (Forex) trading in the European session:

Main headlines:

Obama, Romney Trade Foreign Policy Attacks - Bloomberg

Candidates steer debate onto US economy - Financial Times

If U.S. goes over fiscal cliff, dollar could fly - Reuters

Northern European Investors Steer Clear of Needy South - Wall Street Journal

FOREX action

EUR: The euro seems to be taking a pause after yesterday's gains, which were pronounced against the yen. Positive regional election results in Spain give Rajoy some clout to pursue his reformist agenda. From now on we might see Spain laying the ground to request ESM money. The mentioned step is a must before triggering the ECB's debt purchase program. EUR-USD is trading a tad below 1.3050 and EUR-JPY is holding above 104.00.

GBP: The sterling crosses are on hold. Cable is hovering close to 1.6000 while GBP-JPY is under the 128 handle, and close to 127.84. EUR-GBP trades near 0.8145. BBA is expected today to publish September's mortgage approvals. On Thursday the ONS will release the first estimate of third quarter GDP. Consensus forecast points to a pick up in activity on a quarterly basis.

CHF: The Swiss franc is firming against the euro and the dollar. USD-CHF is now trading close to 0.9282 and EUR-CHF is in the vicinity of 1.2100. Despite recent remarks from SNB vice-chairman Jean-Pierre Danthine saying the franc is still "unusually strong" there is no hint of further measures.

Nordics: The Swedish krona and the Norwegian kroner are putting in a mixed performance versus the dollar and the euro. EUR-SEK is moving above 8.60 and EUR-NOK is trading close to 7.4050 and seems to be breaking the triangle technical pattern visible on the daily chart.

USD & JPY: The Japanese yen is bouncing back after having taken a big hit yesterday due to sputtering exports to China and Europe. The US dollar lacks direction before the monthly FOMC meeting that starts today. Opinion polls name Obama the winner of the third presidential debate against Romney.

CAD, AUD & NZD: The three dollars ease against the yen and the greenback. AUD-USD is still holding above 1.03, though it reached 1.04 last week thanks to the latest Chinese GDP data.

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